One of our recent Two Minute Warnings raised an important question for C-Level executives: “How serious are you about addressing your transportation and supply chain issues?”
The response has resulted in some very interesting conversations with CEOs and C-Level executives. Overall, they are not happy about soaring freight costs, and they have questions about the CODE RED conditions in the transportation marketplace. They also are questioning what their companies should be doing to address how supply chain issues are impacting their operations and bottom line profitability.
Answering their questions about events in the logistics industry is pretty straightforward. Answering their questions about cost mitigation strategies or what their company could be doing to protect their supply chains is another issue. That is why I preface my comments with this reminder: When it comes to managing supply chain and logistics issues, your company has two choices: get serious or get seriously hurt.
Most C-Level executives want to believe that their company is serious about supply chain issues. But there are a number of indicators that show C-Level executives may not be as serious about their supply chains as they need to be.
As MIT Professor David Simchi-Levi noted in a recent webcast we hosted for C-Level executives, most companies have never stress tested their supply chains and identified their vulnerabilities.
Many C-Level executives can’t pass a brief, three question Supply Chain Diagnostic quiz that identifies “must have” supply chain capabilities.
With no written Transportation/Supply Chain Spend Management Plan that includes contingency planning, they often find themselves in a reactive, or “firefighting,” mode to keep their business running.
They overlook the impact of how their “siloed” and “turf protecting” organization is affecting their supply chain and ability to compete in the marketplace.
Participants in two of our recent webcasts heard a common message: Great supply chains don’t happen by accident, they happen by design. So C-Level executives must be serious and committed to supporting those entrusted with managing their transportation and supply chain activities.
In our recent webcast for CEOs and Presidents, participants heard from MIT Professor and supply chain expert David Simchi-Levi, Peter Tirschwell from the Journal of Commerce, and the CEO of Werner Enterprises, Derek Leathers. They all highlighted that with tight capacity across all modes, there will be tension in the supply chain for the remainder of the year.
David Simchi-Levi noted that when (relatively few) companies “stress test” their supply chains, it’s a sign that they are taking their supply chain capabilities for granted. They want to believe that their supply chains are okay.
In another webcast, “Grab A Seat At The Table,” (with our friends from NASSTRAC and CSCMP), we also highlighted how few C-Level executives can “pass” our three question quiz that highlights best practices in managing supply chains. When a CEO tells us they are serious about supply chain issues, but can’t answer any of the three questions that assess important supply chain markers, it should be a clarion call for transportation and logistics professionals: You need to communicate upward to gain support from your C-Level executives!
Our great group of VPs and SVPs on this webcast shared how they have done just that: Communicated upward so that their C-Level executives understand the issues and can make informed decisions about the support/resources that will be required to address what is happening in the transportation markets.
In closing, there are two key points to consider. First, companies who are truly serious about supply chain issues have a written Spend Management Plan that addresses how they manage their supply chain and transportation processes. This plan also addresses how your company will handle “contingencies” and answer the “What if?” questions.
Second, a friendly reminder for C-Level executives who say they are committed to managing their supply chains: You can’t delegate commitment! Specifically, delegating does not mean solving. So if your company has any semblance of being a siloed and turf protecting organization, now more than ever, your team needs C-Level support and commitment to help them manage in these extraordinarily challenging times.
Fortunately, there are great resources for executives who are truly serious about managing these transportation and supply chain issues. For example, our Rapid Assessment process is tremendously effective in jumpstarting an attack on silos by bringing people together from all areas of the company (a.k.a. sales, procurement, operations, logistics, supply chain, and IT) so they can understand and address how their decisions affect your transportation costs and supply chain capabilities. Resources like this can be an effective way of conveying the message that C-Level executives are indeed serious about managing their supply chain issues.